9.  In April 1989 the applicant instituted proceedings in the District Court (tingsrätten) of Stockholm against a forwarding agent, claiming that goods belonging to the applicant had been damaged or lost while in the care of the agent. The agent was later declared bankrupt but the bankruptcy estate of the agent declined to enter as a party to the proceedings. On 16 December 1991 the District Court gave judgment in default (tredskodom) according to which the agent – the bankruptcy debtor – was to pay the applicant 112,340 Swedish kronor (SEK) in damages and SEK 199,210 in litigation costs. No appeal was made and the judgment acquired legal force.
10.  In March 1992 the applicant and the bankruptcy estate of the agent signed an agreement according to which the estate assigned to the applicant the estate’s right to compensation from an insurance company under a third party insurance which had been taken out by the agent to cover possible liabilities incurred in connection with its forwarding business. Subsequently, the applicant instituted proceedings against the insurance company in the District Court, claiming that the insurance company should pay the applicant SEK 29,648 in compensation for damaged or lost goods and SEK 199,210 for the above-mentioned litigation costs.
11.  On 7 July 1995 the District Court rejected the applicant’s claims against the insurance company and ordered the applicant to pay the insurer’s litigation costs in the amount of SEK 276,760. The court found that the bankruptcy estate of the forwarding agent had not been a party to the proceedings concluded by the judgment of 16 December 1991 – which had only determined the agent’s liability vis-à-vis the applicant – and that, thus, the estate had not acquired any rights or obligations on account of that judgment. Accordingly, the estate of the agent had not been in a position to assign to the applicant any rights emanating from the third party insurance.
12.  The applicant appealed to the Svea Court of Appeal (Svea hovrätt) and requested that the enforcement of the District Court’s judgment be suspended as it had not acquired legal force. On 9 August 1995 the appellate court found that there was no legal possibility to suspend the enforcement and thus rejected the applicant’s request.
13.  In order to recover its litigation costs, the insurance company requested the Enforcement Office (kronofogdemyndigheten) to levy execution on the applicant’s assets. The Enforcement Office found, however, that the applicant had no seizeable assets. The insurance company then filed a bankruptcy petition against the applicant. In a decision of 19 October 1995 the District Court considered that the applicant’s appeal against the judgment of 7 July 1995 had no prospects of success and that, consequently, its liability to pay the litigation costs in question would remain unchanged. Noting further that the applicant was insolvent as it had no assets to pay the litigation costs, the court declared the applicant bankrupt and ordered it to pay the insurer’s litigation costs in the bankruptcy proceedings.
14.  The declaration of bankruptcy was upheld by the Court of Appeal on 27 November 1995. However, the applicant made a further appeal to the Supreme Court (Högsta domstolen), and on 12 September 1996 that court quashed the appellate court’s decision, rejected the bankruptcy petition filed against the applicant and ordered the insurance company to pay the applicant’s litigation costs in the bankruptcy proceedings. The Supreme Court found that, by declining to enter as a party to the original damage proceedings, the bankruptcy estate of the forwarding agent had not renounced any rights it might have had vis-à-vis the insurance company under the third party insurance. Consequently, the transfer of its rights under that insurance to the applicant was in fact valid. In view of this and the complexity of other issues raised by the parties in the compensation proceedings adjudicated by the District Court on 7 July 1995, there was no basis for concluding that the applicant’s appeal against that judgment lacked prospects of success. As the inventory of the applicant company did not reveal any other important debts, the declaration of bankruptcy was entirely dependent on the applicant’s possible liability to pay the insurance company’s litigation costs in the compensation proceedings. Having found that the outcome of those proceedings was uncertain, the Supreme Court concluded that the insurer had failed to show that the applicant was insolvent.
15.  Following the Supreme Court’s decision, the District Court, on 4 December 1996, fixed the fee to be paid to the official receiver who had been in charge of the applicant’s bankruptcy at SEK 5,000. The District Court further recalled that the fee was to be paid by the bankruptcy estate. In so doing, it referred to Chapter 2, Section 25 of the Bankruptcy Act (Konkurslagen, 1987:62) which provides that, following the decision by a superior court to quash a declaration of bankruptcy, the assets of the estate shall be returned to the bankruptcy debtor to the extent they are not required for the defrayal of the bankruptcy costs. The receiver’s fee is considered as a bankruptcy cost, according to Chapter 14, Section 1 of the Bankruptcy Act.
16.  The applicant appealed to the Court of Appeal. It did not challenge the fee as such but claimed that liability to bear the bankruptcy costs would violate the property rights of the estate and – consequently – the applicant. The applicant invoked Article 1 of Protocol No. 1 to the Convention.
17.  In a decision of 30 December 1996, the Court of Appeal stated that the District Court had only recalled that, under the relevant law, the receiver’s fee was to be paid by the bankruptcy estate. It had not ruled on the question whether the receiver’s claim for remuneration had priority over the applicant’s right to the assets. As a consequence, this question could not be examined by the Court of Appeal which, accordingly, dismissed the appeal.
18.  The applicant made a further appeal to the Supreme Court. It claimed that, in referring to the above-mentioned provision of the Bankruptcy Act, the District Court had in fact determined that the bankruptcy estate – and not the State – was to defray the receiver’s fee. The use of the word “recall” rather than “decide” was, in these circumstances, irrelevant. The applicant stated further that there was no other legal remedy available for the determination of the liability to pay the fee in question. Referring to Article 6 of the Convention, the applicant therefore claimed that the Court of Appeal was obliged to determine that liability.
19.  On 5 June 1997 the Supreme Court refused the applicant leave to appeal against the Court of Appeal’s decision.
20.  The assets of the bankruptcy estate – SEK 1,597 according to the inventory deed – were appropriated to cover part of the receiver’s fee. The remainder of the fee was paid by the insurance company.
21.  By a decision of 22 September 1997 the Court of Appeal quashed the District Court’s judgment of 7 July 1995 and referred the compensation case back to the latter court for re­examination. The appellate court found that the District Court had not examined the applicant’s claim that the rights under the third party insurance had been transferred from the forwarding agent to its bankruptcy estate at the time when the agent was declared bankrupt, rather than as a consequence of the default judgment of 16 December 1991. The District Court had also failed to consider the insurance company’s counter-claim that, under the relevant provision of the Insurance Contracts Act (Lagen om försäkringsavtal, 1927:77), it was not liable to pay any compensation as, at the time of the declaration of bankruptcy, the policy-holder, i.e. the forwarding agent, had had no claim for compensation. Thus, the District Court had made a procedural error which presumably had affected the outcome of the case and which could not be remedied by the Court of Appeal.
22.  After the case had been referred back to the District Court, the insurance company conceded the applicant’s compensation claims. Consequently, on 22 January 1999, the District Court gave judgment in the applicant’s favour, ordering the insurance company to pay the compensation claimed and the applicant’s litigation costs.